Viral Tweet About Apple Card Leads to Probe Into Goldman Sachs

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(Bloomberg) — A Wall Street regulator is opening a probe into Goldman Sachs Group Inc.’s credit card practices after a viral tweet from a tech entrepreneur alleged gender discrimination in the new Apple Card’s algorithms when determining credit limits.A series of posts from David Heinemeier Hansson starting Thursday railed against the Apple Card for giving him 20 times the credit limit that his wife got. The tweets, many of which contain profanity, immediately gained traction online. Hansson didn’t disclose any specific income-related information for either of them but said they filed joint tax returns and that his wife had a better credit score.“The department will be conducting an investigation to determine whether New York law was violated and ensure all consumers are treated equally regardless of sex,” said a spokesman for Linda Lacewell, the superintendent of the New York Department of Financial Services. “Any algorithm, that intentionally or not results in discriminatory treatment of women or any other protected class of people violates New York law.”“Our credit decisions are based on a customer’s creditworthiness and not on factors like gender, race, age, sexual orientation or any other basis prohibited by law,” said Goldman spokesman Andrew Williams.This is the second such action from the regulator in recent weeks. NY DFS opened a probe against health care giant UnitedHealth Group Inc. after a study found an algorithm favored white patients over black patients.Goldman’s growing ambitions for main street is bringing increased scrutiny and a new set of challenges it hasn’t faced previously. The Apple Card is a joint venture between Apple Inc. and the New York-based bank, which is responsible for all the credit decisions on the card. The card was rolled out earlier this year and executives at both firms hailed it as the most successful launch ever.Hansson said his posts had led to an internal review and that he was hopeful it would spark a conversation about black-box algorithms and the inherent biases in those systems.The 40-year-old Dane is known as being the brainchild behind the popular programming tool Ruby on Rails. He’s a partner at Basecamp, a web-based software development firm, and also known to regularly take part in automobile endurance races, including the 24 hours of Le Mans in France.While Hansson didn’t offer full disclosure on the financials underpinning his complaint, lenders’ use of algorithms in credit decisions has drawn scrutiny in Congress. In June, the House Financial Services Committee heard about examples of algorithmic decision-making where researchers have found instances of bias targeting specific groups even when there was no intent to discriminate.To contact the reporters on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net;Shahien Nasiripour in New York at snasiripour1@bloomberg.netTo contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Virginia Van Natta, Matthew G. MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.